What Is ARV?
After-repair value (ARV) is the estimated market value of a property once planned renovations are finished, based on recent sales of comparable renovated homes. It is used when budgeting a flip, BRRRR or renovation loan, and matters because the purchase price, repair budget and profit are all measured against it.
ARV in plain English
ARV is your best estimate of what a house will be worth once the planned work is finished. It is not today's value - it is the value of the finished product.
You estimate it from recent sales of similar, already-renovated homes nearby, adjusted for differences in size, features and location.
Worked example
Estimating ARV from three renovated comps
Illustrative example - round numbers, not current market data. Calculated with Reaixo's calculator engines.
Assumptions
- Comp 1
- sold for $305,000; adjustment +$5,000
- Comp 2
- sold for $318,000; adjustment −$8,000
- Comp 3
- sold for $300,000; adjustment +$10,000
- Planned renovation
- $60,000
| Step | Calculation | Result |
|---|---|---|
| 1. Adjusted comp 1 | $305,000 + $5,000 | $310,000 |
| 2. Adjusted comp 2 | $318,000 − $8,000 | $310,000 |
| 3. Adjusted comp 3 | $300,000 + $10,000 | $310,000 |
| 4. ARV estimate (average of adjusted comps) | ($310,000 + $310,000 + $310,000) ÷ 3 | $310,000 |
| 5. Maximum offer under the 70% rule | $310,000 × 70% − $60,000 | $157,000 |
ARV: $310,000. If the finished house matches the comps, it should be worth about $310,000. A flipper using the 70% rule would offer no more than $157,000 for it today.
What this calculation leaves out
- Adjustments for size, condition, lot and location are judgment calls - an appraiser may make different ones.
- Comps must be recent, nearby and renovated to the same standard you plan.
- The 70% rule is a screening rule of thumb, not a valuation; it does not replace a full budget of financing, holding and selling costs.
Try it: ARV with your own numbers
Interactive and illustrative: change any value and the results update instantly in your browser. The figures come from the same engines as REAIXO's full calculators.
The BRRRR cycle: buy, rehab, rent, refinance, repeat
BRRRR recycles your cash: a renovation raises the value, a cash-out refinance at that value returns money, and that money funds the next deal.
- All-in cost
- $210,000
- Cash returned at refinance
- $205,000
- New loan $210,000
- Cash left in the deal
- $5,000
- Not fully recycled
- Cash flow after refinance
- −$139/mo
- Negative
- 1 of 5 →Buy$150,000Purchase below market, often with cash or a short-term loan.
- 2 of 5 →Rehab$60,000Renovate to raise the value, plus closing and holding costs.
- 3 of 5 →Rent$2,200/moStabilize with a tenant at market rent.
- 4 of 5 →Refinance$210,000Cash-out loan at 75% of the appraised value.
- 5 of 5 ↺ back to 1Repeat$205,000Recycle the cash returned into the next property.
- After the refinance the property loses about $139 a month.
- $5,000 of your cash stays in the property after the refinance.
- The appraisal may come in below your ARV, returning less cash.
- Many lenders require 6 to 12 months of ownership before a cash-out refinance uses the new value.
Formula
All-in = Purchase + Rehab + Closing and holdingCash returned = ARV × Refinance LTV − Refinance costsCash left in = All-in − Cash returnedAssumptions
- 30-year fixed refinance; operating costs entered as one monthly figure.
- Short-term financing costs during the rehab are part of holding costs.
Why it matters
ARV is the key number in fix-and-flip and BRRRR analysis — investors compare it against total project cost to determine potential profit.
Every flip and BRRRR budget starts from ARV. An ARV that is 5% too high on a $310,000 house overstates profit by about $15,500 - often most of the expected margin.
What it means for you
What investors should know
Stress-test the deal with an ARV 5-10% lower than your estimate. If the project still works, the margin of safety is real.
Common mistakes
- Using comps that are not renovated to the same standard, or are in a different neighborhood.
- Using list prices instead of closed sales.
- Assuming the renovation will add value the market has not shown it pays for.
Compare and common questions
ARV: frequently asked questions
How do you calculate ARV?
Find three or more recent, nearby sales of renovated homes like the finished project, adjust each for differences, and reconcile the adjusted prices into one value. An appraiser or agent can check your comps.
Is ARV the same as appraised value?
No. ARV is a forecast made before the work; the appraised value is an appraiser's opinion at a point in time. A lender's "subject to completion" appraisal is the closest thing to a formal ARV.
What is the 70% rule?
A screening rule of thumb for flips: offer no more than 70% of ARV minus repair costs. It leaves room for financing, holding, selling costs and profit, but does not replace a full budget.
Go deeper
Recommended calculators
Run ARV with your own numbers:
Where it fits
- Investing, Deal Sourcing: before this, Maximum Allowable Offer; next, Gross Rent Multiplier.
More Investing Terms
Recommended next step
Turn your ARV and repair budget into a maximum offer.
Maximum allowable offer calculator →Apply it to a specific property: Fix-and-flip analysis, Comparable sales analysis.
Sources and review
No regulator defines this term; the page follows common industry practice.
Where this applies: Industry convention - no single regulatory definition. Lenders and appraisers may define inputs differently.
Last reviewed: · Updated:
Examples use illustrative figures; rules of thumb are labelled as such. Rates, limits and program rules change - confirm current figures with your lender or a qualified professional.
This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
Apply these investment calculations to a real property
Run the numbers with the free calculator, or get a property-specific analysis built on the same calculations.
- Free calculatorMaximum Allowable Offer Calculator →Runs in your browser; nothing to sign up for.
- Paid reportFix and Flip Analysis →Project ARV, renovation costs and flip profit. Price shown before checkout.
Or analyze a specific property: Essential Property Analysis, $19 · Property Decision Analysis, $49 · Professional Property Analysis, $99. You choose the depth before you pay.